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Mapletree Logistics Trust Remains Fundamentally Strong



Key Highlights:

  • Mapletree Logistics Trust's (SGX:M44U) 3Q20 DPU grew 2.1%

  • The annualised yield and price to book ratio are 4.5% and 1.53 respectively



1. Dividends


Net property income and distribution per unit grew 3.9% and 2.1% to $108.6m and 2.044 cents, respectively. The increase was mainly due to the higher contributions from existing assets and new acquisitions in Australia, South Korea and Vietnam. However, it was also partially offset by loss of income from five divestment in Japan.


The annualised yield is 4.5%. It is currently trading at historical low yield.



2. Portfolio


Portfolio occupancy remains stable at 97.7%. While the REIT enjoyed positive rental reversion of 1.2% during the last quarter, 23.7% of its gross income will be up for renewal in 2021.


Portfolio leverage went up slightly to 37.5%. The overall interest cost is low at 2.5%. Besides, the REIT also reckons the risk of currency fluctuation, and it has hedged 84% of its distributable income to SGD. Based on the 45% leverage ratio, Mapletree Logistics Trust still has debt headroom of $1.1b.


It is currently trading at a price to book ratio of 1.53.



3. Growth catalyst


The management will continue to focus on asset management initiatives and potential yield accretive acquisitions. On the other hand, with the geopolitical uncertainties, tenants are very cautious on renewals which may impact the leasing demand negatively.



Summary


Despite the slowdown in the economy, the fundamentals of the REIT still remains strong, but we think that the price is slightly high at the moment.



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